Question

Here are some transactions for Leon Inc.

Proceeds from issuance of bonds payable
$500,000
Payment to purchase equipment
20,000
Payment of wages
100,000
Payment of dividends
150,000
Payment to pay off notes payable
200,000
Based on these transactions, what is the net cash flow from financing activities?

a.
$130,000 net cash provided by financing activities

b.
$280,000 net cash used for financing activities

c.
$30,000 net cash provided by financing activities

d.
$150,000 net cash provided by financing activities

Answer 1

The net cash flow from financing activities for Leon Inc. is calculated as the proceeds from the issuance of bonds minus the payment of dividends and the payment to pay off notes payable, resulting in $150,000 net cash provided by financing activities.

Step-by-step explanation:

To calculate the net cash flow from financing activities for Leon Inc., we need to consider only the transactions that affect financing activities, which include issuing bonds, paying dividends, and repaying debts.

• Proceeds from issuance of bonds payable: $500,000 (cash inflow)
• Payment of dividends: $150,000 (cash outflow)
• Payment to pay off notes payable: $200,000 (cash outflow)

Now, we sum up the cash inflows and outflows related to financing activities:

Net cash flow from financing activities = Proceeds from bonds - Payment of dividends - Payment to pay off notes payable

Net cash flow from financing activities = $500,000 - $150,000 - $200,000

Net cash flow from financing activities = $150,000 net cash provided by financing activities

Hence, the correct answer is (d) $150,000 net cash provided by financing activities.